SELECT WATER SOLUTIONS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS AND OPERATIONAL UPDATES
- Generated full year 2023 consolidated revenue of $1.6 billion, up 14% year-over-year
- Water Infrastructure segment revenue reached $230.0 million, up 84% year-over-year
- Operating cash flows amounted to $285.4 million, a significant increase from the previous year
- Returned $86.7 million of capital to shareholders in full year 2023 through share repurchases and dividends
- Announced four new business development projects in key regions with long-term contracts
- None.
Insights
The reported increase in consolidated revenue and operating cash flows for Select Water Solutions, Inc. indicates a robust financial performance, particularly noteworthy is the 84% revenue growth in the Water Infrastructure segment. This substantial growth reflects a strong demand for water infrastructure services, likely spurred by increased industrial activity or regulatory changes requiring better water management. The strategic allocation of capital, including both share repurchases and dividends, suggests a shareholder-friendly approach and confidence in the company's liquidity and future earnings potential.
However, the mention of industry activity declines impacting other segments raises concerns about the sustainability of growth across the company's portfolio. Investors should monitor sector-specific trends and potential vulnerabilities in the company's diversified business model. The balance between maintenance and growth capital expenditures points to a disciplined investment strategy, focusing on sustaining existing assets while selectively pursuing growth opportunities, which could be a positive sign for long-term value creation.
The announcement of new business development projects, notably the Thompson Pipeline, suggests an aggressive expansion strategy in key regions. The commitment to long-term contracts is a strategic move that could provide stable and predictable revenue streams, mitigating the volatility often associated with the water and chemical solutions industry. This expansion into areas with high activity such as the Permian, Northeast and Bakken regions aligns with broader industry trends favoring investments in infrastructure to support energy production and other resource-intensive industries.
Investors should take note of the company's ability to secure large acreage dedications, as this indicates a competitive edge in the market and the potential for long-term partnerships. The focus on greenfield and brownfield projects also underscores a balanced approach to growth, leveraging new opportunities while enhancing existing assets. The projected net capital expenditures for 2024 provide a clear roadmap for the company's investment priorities, which is crucial information for stakeholders assessing the company's growth trajectory.
The reported increase in operating cash flows and net income, coupled with the repayment of outstanding debt, signifies a strong financial position and efficient capital management. The ability to return significant capital to shareholders while simultaneously investing in growth and reducing leverage is indicative of a healthy cash flow situation. This financial strategy can be seen as a positive signal to the market, potentially leading to an enhanced credit profile and possibly lower cost of capital in the future.
From an economic perspective, the company's investment in water infrastructure is particularly relevant, as water management becomes increasingly critical in many regions due to environmental concerns and the need for sustainable resource usage. The emphasis on sustainable solutions could position the company favorably in an economy that is progressively focusing on environmental, social and governance (ESG) factors. Investors often view companies with strong ESG profiles as lower risk, which could be beneficial for the company's stock valuation in the long run.
Generated full year 2023 consolidated revenue of
Water Infrastructure generated full year 2023 revenues of
Delivered full year 2023 operating cash flows of
Returned
Announces four new business development projects backed by long-term contracts in the Permian, Northeast and Bakken regions, including the Thompson Pipeline, an approximately
John Schmitz, Chairman of the Board, President and CEO, stated, "The fourth quarter concluded a record-setting year for Select, with full year 2023 consolidated revenue, net income, adjusted EBITDA and operating cash flow all reaching record highs for the Company. With this record operating cash flow, we were able to fund a diverse capital allocation strategy throughout 2023. This included funding our maintenance capex as well as our growth capex plans, particularly around our Water Infrastructure segment, substantially increasing our capital returns to shareholders, by growing our base dividend by
"Each of our segments saw year-over-year revenue and gross profit gains during 2023. Importantly, we made tremendous progress accelerating the growth of our Water Infrastructure segment, seeing its full year 2023 segment revenue and gross profit grow
"Looking ahead to 2024, we are targeting net capital expenditures of
"I am very confident in our strong backlog for both greenfield and brownfield infrastructure system projects and am excited about the new projects we announced today, especially the Thompson Pipeline in the Bakken, which has been a multi-year development effort for the team. Despite recent commodity price and activity volatility, we continue to experience increased demand for new infrastructure development opportunities across all basins as water infrastructure constraints remain a significant challenge for our customers. Furthermore, the strength of our recent financial performance, including the strong free cash flow generated from our Water Services and Chemical Technologies segments, positioned us to fund these newly announced infrastructure projects in addition to a trio of additional strategic acquisitions during the early part of the first quarter of 2024. Each of these projects and recent acquisitions capitalizes on our existing market leading positions, established infrastructure and customer relationships.
"This backlog of accretive capital projects, funded through Select's uniquely diversified free cash flow generation, positions our Water Infrastructure segment as one of the fastest growing infrastructure franchises in the industry and I expect to see continued steady financial growth during 2024 and beyond for this segment. While we expect to see some modest friction to our first quarter margins as we integrate and standardize our recent acquisitions into the segment, we firmly believe we can generate attractive year-over-year incremental margins in the Water Infrastructure segment during 2024. Specifically, as we look at the full year of 2024, we expect to see Water Infrastructure segment revenues grow by
"We maintain a high level of conviction around the continued growth opportunities in our Water Infrastructure segment, especially as oil prices remain attractive at current levels for our customers. That said, recent volatility in natural gas prices and anticipated customer budget declines are likely to have year-over-year revenue impacts within our Water Services and Chemical Technologies segments. Despite this, we believe we can still find opportunities to improve the margin profile of these two segments on a year-over-year basis in 2024. Additionally, as we look for ways to further improve our margins and stabilize our cash flows, we will continue to evaluate our Water Services segment for underperforming and non-strategic operations for potential consolidation or divestment during 2024, which when combined with the macro activity outlook, we believe will likely drive Water Services segment revenues down on a year-over-year basis.
"For the first quarter of 2024, we expect consolidated Adjusted EBITDA of
"Accordingly, with the continued growth in our Water Infrastructure business and the stability we expect within our Chemical Technologies segment, I believe we are well on a path to achieving our previously stated target of generating more than
"While we will not have the continued tailwind of our 2023 working capital reduction efforts, we fully expect to continue to generate a substantial amount of free cash flow during 2024. With minimal capital requirements, we expect our Water Services and Chemical Technologies segments to convert more than
"In summary, I was very pleased with our 2023 financial performance. More importantly, I believe with our continued M&A execution and our organic infrastructure investments, we are well positioned to capitalize on additional opportunities ahead. I firmly trust in the infrastructure-oriented strategy we've undertaken and the incremental value it brings to our customers, our company and our shareholders. Ultimately, I believe that Select remains distinctively positioned in the competitive energy landscape to advance a unique integration of water and chemical technology solutions with high-margin, long-term contracted infrastructure," concluded Schmitz.
Full Year 2023 Consolidated Financial Information
Revenue for full year 2023 was
For full year 2023, gross profit was
Selling, general and administrative expense ("SG&A") during full year 2023 was
Adjusted EBITDA was
Fourth Quarter 2023 Consolidated Financial Information
Revenue for the fourth quarter of 2023 was
For the fourth quarter of 2023, gross profit was
SG&A during the fourth quarter of 2023 was
Adjusted EBITDA was
Business Segment Information
The Water Services segment generated revenues of
The Water Infrastructure segment generated revenues of
The Chemical Technologies segment generated revenues of
Cash Flow and Capital Expenditures
Cash flow from operations for the full year 2023 was
Net capital expenditures for the full year 2023 were
Additionally, cash flow from investing activities during the fourth quarter of 2023 was impacted by
Cash flows from financing activities during the full year 2023 included
Balance Sheet and Capital Structure
Total cash and cash equivalents were
As of December 31, 2023 and December 31, 2022, the borrowing base under the sustainability-linked credit facility was
Total liquidity was
Water Infrastructure Business Development Updates
Bakken Thompson Pipeline Project
Select recently signed an eight-year contract for the sourcing and delivery of completions water in the Bakken region. Select anticipates constructing the Thompson Pipeline, a 24-mile, 18" diameter pipeline, and 3.0 million barrels of storage capacity that leverage our permitted intake off the north side of Lake Sakakawea to provide completion water for the customer's completions activity in
During the fourth quarter of 2023, Select also acquired certain legacy revenue royalty interests associated with the Thompson Pipeline project as well as Select's other active Bakken Pipeline systems, for
During November 2023, Select executed a contract to build a 2-mile produced water gathering pipeline tied into our previously announced
Select recently entered into an amended agreement on one of our fixed recycling facilities in the
Northeast Disposal Agreement
Select recently entered into a multi-year disposal contract with a large public independent in the Northeast region. In exchange for an acreage dedication and a target minimum volume commitment, Select has agreed to a firm capacity commitment at the facility for the customer, adding long-term revenues to a previously acquired asset.
Segment Reporting
During the quarter ended June 30, 2023, Select realigned its reportable segments to better reflect its strategy, how its businesses are managed and provide greater visibility into each business' financial performance. As a result of these changes, Select's legacy water sourcing and certain temporary water logistics service offerings which were previously reported in the Water Infrastructure segment are now included in the Water Services segment.
The financial information for the full year and fourth quarter of 2023 in this press release is presented under the realigned segment structure, and the historical financial information for prior periods has been recast to conform to the realigned segment structure. The changes in segment reporting have no impact on the Company's historical consolidated financial positions, results of operations or cash flows.
Fourth Quarter Earnings Conference Call
In conjunction with today's release, Select has scheduled a conference call on Wednesday, February 21, 2024, at 11:00 a.m. Eastern time / 10:00 a.m. Central time. Please dial 201-389-0872 and ask for the Select Water Solutions call at least 10 minutes prior to the start time of the call, or listen to the call live over the Internet by logging on to the website at the address https://investors.selectwater.com/events-presentations/current. A telephonic replay of the conference call will be available through March 6, 2024, and may be accessed by calling 201-612-7415 using passcode 13743873#. A webcast archive will also be available at the link above shortly after the call and will be accessible for approximately 90 days.
About Select Water Solutions, Inc.
Select is a leading provider of sustainable water and chemical solutions to the energy industry. These solutions are supported by the Company's critical water infrastructure assets, chemical manufacturing and water treatment and recycling capabilities. As a leader in sustainable water and chemical solutions, Select places the utmost importance on safe, environmentally responsible management of water throughout the lifecycle of a well. Additionally, Select believes that responsibly managing water resources throughout its operations to help conserve and protect the environment is paramount to the Company's continued success. For more information, please visit Select's website, https://www.selectwater.com.
Cautionary Statement Regarding Forward-Looking Statements
All statements in this communication other than statements of historical facts are forward-looking statements which contain our current expectations about our future results. We have attempted to identify any forward-looking statements by using words such as "could," "believe," "anticipate," "expect," "intend," "project," "will," "estimates," "preliminary," "forecast" and other similar expressions. Examples of forward-looking statements include, but are not limited to, the expectations of plans, business strategies, objectives and growth, projected financial results and future financial and operational performance, expected capital expenditures, our share repurchase program and future dividends. Although we believe that the expectations reflected, and the assumptions or bases underlying our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Such statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause our actual results, events or financial positions to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include the risks that the benefits contemplated from our recent acquisitions may not be realized, the ability of Select to successfully integrate the acquired businesses' operations, including employees, and realize anticipated synergies and cost savings and the potential impact of the consummation of the acquisitions on relationships, including with employees, suppliers, customers, competitors and creditors. Factors that could materially impact such forward-looking statements include, but are not limited to: the global macroeconomic uncertainty related to the
WTTR-ER
Contacts: | Select Water Solutions, Inc. |
Chris George – Senior Vice President, Corporate | |
Development, Investor Relations & Sustainability | |
(713) 296-1073 | |
Dennard Lascar Investor Relations | |
Ken Dennard / Natalie Hairston | |
(713) 529-6600 | |
SELECT WATER SOLUTIONS, INC. | |||||||||||||||
Three months ended, | Year ended December 31, | ||||||||||||||
Dec 31, 2023 | Sept 30, 2023 | Dec 31, 2022 | 2023 | 2022 | |||||||||||
Revenue | |||||||||||||||
Water Services | $ | 241,751 | $ | 251,870 | $ | 251,104 | $ | 1,032,896 | $ | 944,497 | |||||
Water Infrastructure | 60,852 | 58,375 | 44,598 | 229,970 | 125,284 | ||||||||||
Chemical Technologies | 72,257 | 79,028 | 85,974 | 322,487 | 317,639 | ||||||||||
Total revenue | 374,860 | 389,273 | 381,676 | 1,585,353 | 1,387,420 | ||||||||||
Costs of revenue | |||||||||||||||
Water Services | 187,731 | 200,361 | 206,528 | 814,609 | 764,569 | ||||||||||
Water Infrastructure | 34,473 | 34,992 | 31,517 | 138,191 | 82,941 | ||||||||||
Chemical Technologies | 62,061 | 63,005 | 70,978 | 262,078 | 265,648 | ||||||||||
Depreciation and amortization | 36,037 | 34,650 | 31,082 | 138,813 | 113,507 | ||||||||||
Total costs of revenue | 320,302 | 333,008 | 340,105 | 1,353,691 | 1,226,665 | ||||||||||
Gross profit | 54,558 | 56,265 | 41,571 | 231,662 | 160,755 | ||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative | 46,401 | 38,983 | 34,143 | 155,548 | 118,935 | ||||||||||
Depreciation and amortization | 430 | 512 | 573 | 2,276 | 2,209 | ||||||||||
Impairments and abandonments | 1,053 | 32 | — | 12,607 | — | ||||||||||
Lease abandonment costs | (31) | (12) | 113 | 42 | 449 | ||||||||||
Total operating expenses | 47,853 | 39,515 | 34,829 | 170,473 | 121,593 | ||||||||||
Income from operations | 6,705 | 16,750 | 6,742 | 61,189 | 39,162 | ||||||||||
Other income (expense) | |||||||||||||||
(Loss) gain on sales of property and equipment and divestitures, net | (1,898) | 23 | 287 | (210) | 2,192 | ||||||||||
Interest expense, net | (103) | (765) | (870) | (4,393) | (2,700) | ||||||||||
Bargain purchase gain | — | — | (416) | — | 13,352 | ||||||||||
Tax receivable agreements expense | (38,187) | — | — | (38,187) | — | ||||||||||
Other | (58) | 767 | 2,450 | 2,424 | 4,718 | ||||||||||
(Loss) income before income tax benefit (expense) | (33,541) | 16,775 | 8,193 | 20,823 | 56,724 | ||||||||||
Income tax benefit (expense) | 61,264 | (483) | (285) | 60,196 | (957) | ||||||||||
Equity in losses of unconsolidated entities | (84) | (978) | (337) | (1,800) | (913) | ||||||||||
Net income | 27,639 | 15,314 | 7,571 | 79,219 | 54,854 | ||||||||||
Less: net (income) loss attributable to noncontrolling interests | (44) | (968) | 78 | (4,816) | (6,576) | ||||||||||
Net income attributable to Select Water Solutions, Inc. | $ | 27,595 | $ | 14,346 | $ | 7,649 | $ | 74,403 | $ | 48,278 | |||||
Net income per share attributable to common stockholders: | |||||||||||||||
Class A—Basic | $ | 0.28 | $ | 0.14 | $ | 0.08 | $ | 0.73 | $ | 0.51 | |||||
Class B—Basic | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
Net income per share attributable to common stockholders: | |||||||||||||||
Class A—Diluted | $ | 0.27 | $ | 0.14 | $ | 0.07 | $ | 0.72 | $ | 0.50 | |||||
Class B—Diluted | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
SELECT WATER SOLUTIONS, INC. | ||||||
As of December 31, | ||||||
2023 | 2022 | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 57,083 | $ | 7,322 | ||
Accounts receivable trade, net of allowance for credit losses of | 322,611 | 429,983 | ||||
Accounts receivable, related parties | 171 | 5,087 | ||||
Inventories | 38,653 | 41,164 | ||||
Prepaid expenses and other current assets | 35,541 | 34,380 | ||||
Total current assets | 454,059 | 517,936 | ||||
Property and equipment | 1,144,989 | 1,084,005 | ||||
Accumulated depreciation | (627,408) | (584,451) | ||||
Total property and equipment, net | 517,581 | 499,554 | ||||
Right-of-use assets, net | 39,504 | 47,662 | ||||
Goodwill | 4,683 | — | ||||
Other intangible assets, net | 116,189 | 138,800 | ||||
Deferred tax assets | 61,617 | — | ||||
Other long-term assets, net | 24,557 | 18,901 | ||||
Total assets | $ | 1,218,190 | $ | 1,222,853 | ||
Liabilities and Equity | ||||||
Current liabilities | ||||||
Accounts payable | $ | 42,582 | $ | 61,539 | ||
Accrued accounts payable | 66,182 | 67,462 | ||||
Accounts payable and accrued expenses, related parties | 4,086 | 3,305 | ||||
Accrued salaries and benefits | 28,401 | 28,686 | ||||
Accrued insurance | 19,720 | 26,180 | ||||
Sales tax payable | 1,397 | 3,056 | ||||
Tax receivable agreements liabilities | 469 | — | ||||
Accrued expenses and other current liabilities | 33,511 | 23,292 | ||||
Current operating lease liabilities | 15,005 | 17,751 | ||||
Current portion of finance lease obligations | 194 | 19 | ||||
Total current liabilities | 211,547 | 231,290 | ||||
Tax receivable agreements liabilities | 37,718 | — | ||||
Long-term operating lease liabilities | 37,799 | 46,388 | ||||
Long-term debt | — | 16,000 | ||||
Other long-term liabilities | 38,954 | 45,447 | ||||
Total liabilities | 326,018 | 339,125 | ||||
Commitments and contingencies | ||||||
Class A common stock, | 1,022 | 1,094 | ||||
Class A-2 common stock, | — | — | ||||
Class B common stock, | 162 | 162 | ||||
Preferred stock, | — | — | ||||
Additional paid-in capital | 1,008,095 | 1,075,915 | ||||
Accumulated deficit | (236,791) | (311,194) | ||||
Total stockholders' equity | 772,488 | 765,977 | ||||
Noncontrolling interests | 119,684 | 117,751 | ||||
Total equity | 892,172 | 883,728 | ||||
Total liabilities and equity | $ | 1,218,190 | $ | 1,222,853 | ||
SELECT WATER SOLUTIONS, INC. | |||||||||||||||
Three months ended, | Year ended December 31, | ||||||||||||||
Dec 31, 2023 | Sept 30, 2023 | Dec 31, 2022 | 2023 | 2022 | |||||||||||
Cash flows from operating activities | |||||||||||||||
Net income | $ | 27,639 | $ | 15,314 | $ | 7,571 | $ | 79,219 | $ | 54,854 | |||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||||||
Depreciation and amortization | 36,467 | 35,162 | 31,655 | 141,089 | 115,716 | ||||||||||
Deferred tax benefit | (61,959) | — | (188) | (61,959) | (188) | ||||||||||
Tax receivable agreements expense | 38,187 | — | — | 38,187 | — | ||||||||||
Loss (gain) on disposal of property and equipment and divestitures | 1,898 | (23) | (287) | 210 | (2,192) | ||||||||||
Equity in losses of unconsolidated entities | 84 | 978 | 337 | 1,800 | 913 | ||||||||||
Bad debt expense (recovery) | 1,204 | 1,156 | (68) | 5,191 | 2,023 | ||||||||||
Amortization of debt issuance costs | 123 | 122 | 122 | 489 | 661 | ||||||||||
Inventory adjustments | 1,792 | 115 | (125) | 2,349 | (737) | ||||||||||
Equity-based compensation | 4,582 | 5,014 | 4,547 | 17,369 | 15,570 | ||||||||||
Impairments and abandonments | 1,053 | 32 | — | 12,607 | — | ||||||||||
Bargain purchase gain | — | — | 416 | — | (13,352) | ||||||||||
Other operating items, net | 506 | (52) | (1,004) | (450) | (1,714) | ||||||||||
Changes in operating assets and liabilities | |||||||||||||||
Accounts receivable | 31,833 | 74,081 | (20,789) | 102,300 | (162,257) | ||||||||||
Prepaid expenses and other assets | 12,068 | (11,613) | 1,430 | (6,729) | 1,229 | ||||||||||
Accounts payable and accrued liabilities | (12,284) | (2,073) | 11,721 | (46,317) | 22,705 | ||||||||||
Net cash provided by operating activities | 83,193 | 118,213 | 35,338 | 285,355 | 33,231 | ||||||||||
Cash flows from investing activities | |||||||||||||||
Proceeds received from divestitures | — | — | — | — | 1,700 | ||||||||||
Purchase of property and equipment | (33,465) | (35,166) | (21,069) | (135,866) | (71,884) | ||||||||||
Purchase of equity-method investments | — | — | (900) | (500) | (7,667) | ||||||||||
Collection of note receivable | — | — | — | — | 184 | ||||||||||
Distribution from cost method investment | — | — | — | — | 60 | ||||||||||
Acquisitions, net of cash and restricted cash received | (4,275) | — | (11,671) | (17,693) | (6,959) | ||||||||||
Proceeds received from sales of property and equipment | 5,511 | 1,579 | 9,887 | 16,891 | 31,320 | ||||||||||
Net cash used in investing activities | (32,229) | (33,587) | (23,753) | (137,168) | (53,246) | ||||||||||
Cash flows from financing activities | |||||||||||||||
Borrowings from revolving line of credit | — | — | 61,000 | 105,250 | 143,000 | ||||||||||
Payments on revolving line of credit | — | (65,000) | (45,000) | (121,250) | (127,000) | ||||||||||
Payments on current and long-term debt | — | — | (3,295) | — | (22,075) | ||||||||||
Payments of finance lease obligations | (43) | (45) | (4) | (98) | (112) | ||||||||||
Payment of debt issuance costs | — | — | — | — | (2,144) | ||||||||||
Dividends and distributions paid | (7,017) | (5,821) | (6,020) | (24,924) | (6,020) | ||||||||||
Proceeds from share issuance | — | — | 18 | — | 53 | ||||||||||
Distributions to noncontrolling interests | — | — | (1,943) | (1,581) | (1,943) | ||||||||||
Purchase of noncontrolling interests | — | — | (22,000) | — | (22,000) | ||||||||||
Contributions from noncontrolling interests | — | 1,000 | — | 5,950 | — | ||||||||||
Repurchase of common stock | (11,865) | (276) | (243) | (61,770) | (20,210) | ||||||||||
Net cash used in financing activities | (18,925) | (70,142) | (17,487) | (98,423) | (58,451) | ||||||||||
Effect of exchange rate changes on cash | 1 | (3) | 2 | (3) | (13) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 32,040 | 14,481 | (5,900) | 49,761 | (78,479) | ||||||||||
Cash and cash equivalents, beginning of period | 25,043 | 10,562 | 13,222 | 7,322 | 85,801 | ||||||||||
Cash and cash equivalents, end of period | $ | 57,083 | $ | 25,043 | $ | 7,322 | $ | 57,083 | $ | 7,322 | |||||
Comparison of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, gross profit before depreciation and amortization (D&A) and gross margin before D&A are not financial measures presented in accordance with accounting principles generally accepted in the
Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Gross profit is the GAAP measure most directly comparable to gross profit before D&A. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA, Adjusted EBITDA or gross profit before D&A in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA, Adjusted EBITDA and gross profit before D&A may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net income, which is the most directly comparable GAAP measure for the periods presented:
Three months ended, | Year Ended December 31, | ||||||||||||||
Dec 31, 2023 | Sept 30, 2023 | Dec 31, 2022 | 2023 | 2022 | |||||||||||
(unaudited) | (unaudited) | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Net income | $ | 27,639 | $ | 15,314 | $ | 7,571 | $ | 79,219 | $ | 54,854 | |||||
Interest expense, net | 103 | 765 | 870 | 4,393 | 2,700 | ||||||||||
Income tax (benefit) expense | (61,264) | 483 | 285 | (60,196) | 957 | ||||||||||
Depreciation and amortization | 36,467 | 35,162 | 31,655 | 141,089 | 115,716 | ||||||||||
EBITDA | 2,945 | 51,724 | 40,381 | 164,505 | 174,227 | ||||||||||
Tax receivable agreements expense | 38,187 | — | — | 38,187 | — | ||||||||||
Impairments and abandonments | 1,053 | 32 | — | 12,607 | — | ||||||||||
Bargain purchase gain | — | — | 416 | — | (13,352) | ||||||||||
Non-cash loss on sale of assets or subsidiaries | 518 | 583 | 1,259 | 3,350 | 4,400 | ||||||||||
Non-cash compensation expenses | 4,582 | 5,014 | 4,547 | 17,369 | 15,570 | ||||||||||
Transaction and rebranding costs | 10,934 | 4,669 | 4,211 | 20,447 | 11,672 | ||||||||||
Lease abandonment costs | (31) | (12) | 113 | 42 | 449 | ||||||||||
Other non-recurring charges | 2 | 1 | 917 | 6 | 926 | ||||||||||
Equity in losses of unconsolidated entities | 84 | 978 | 337 | 1,800 | 913 | ||||||||||
Adjusted EBITDA | $ | 58,274 | $ | 62,989 | $ | 52,181 | $ | 258,313 | $ | 194,805 | |||||
The Company is unable to provide a reconciliation of the forward-looking non-GAAP financial measure, Adjusted EBITDA, to its most directly comparable GAAP financial measure, net income, as the information necessary for a quantitative reconciliation, including potential acquisition-related transaction and rebranding costs as well as the purchase price accounting allocation of the recent acquisitions and the resulting impacts to depreciation and amortization expense, among other items is not available to the Company without unreasonable efforts due to the inherent difficulty and impracticability of predicting certain amounts required by GAAP with a reasonable degree of accuracy at this time.
The following table presents a reconciliation of gross profit before D&A to total gross profit, which is the most directly comparable GAAP measure, and a calculation of gross margin before D&A for the periods presented:
Three months ended, | Year Ended December 31, | ||||||||||||||
Dec 31, 2023 | Sept 30, 2023 | Dec 31, 2022 | 2023 | 2022 | |||||||||||
(unaudited) | (unaudited) | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Gross profit by segment | |||||||||||||||
Water services | $ | 31,234 | $ | 28,689 | $ | 20,841 | $ | 126,939 | $ | 97,009 | |||||
Water infrastructure | 15,909 | 14,191 | 7,530 | 54,484 | 20,779 | ||||||||||
Chemical technologies | 7,415 | 13,385 | 13,200 | 50,238 | 42,967 | ||||||||||
As reported gross profit | 54,558 | 56,265 | 41,571 | 231,662 | 160,755 | ||||||||||
Plus depreciation and amortization | |||||||||||||||
Water services | 22,786 | 22,820 | 23,735 | 91,347 | 82,919 | ||||||||||
Water infrastructure | 10,470 | 9,192 | 5,551 | 37,295 | 21,564 | ||||||||||
Chemical technologies | 2,781 | 2,638 | 1,796 | 10,171 | 9,024 | ||||||||||
Total depreciation and amortization | 36,037 | 34,650 | 31,082 | 138,813 | 113,507 | ||||||||||
Gross profit before D&A | $ | 90,595 | $ | 90,915 | $ | 72,653 | $ | 370,475 | $ | 274,262 | |||||
Gross profit before D&A by segment | |||||||||||||||
Water services | 54,020 | 51,509 | 44,576 | 218,287 | 179,928 | ||||||||||
Water infrastructure | 26,379 | 23,383 | 13,081 | 91,779 | 42,343 | ||||||||||
Chemical technologies | 10,196 | 16,023 | 14,996 | 60,409 | 51,991 | ||||||||||
Total gross profit before D&A | $ | 90,595 | $ | 90,915 | $ | 72,653 | $ | 370,475 | $ | 274,262 | |||||
Gross margin before D&A by segment | |||||||||||||||
Water services | 22.3 % | 20.5 % | 17.8 % | 21.1 % | 19.1 % | ||||||||||
Water infrastructure | 43.3 % | 40.1 % | 29.3 % | 39.9 % | 33.8 % | ||||||||||
Chemical technologies | 14.1 % | 20.3 % | 17.4 % | 18.7 % | 16.4 % | ||||||||||
Other | n/a | n/a | n/a | n/a | n/a | ||||||||||
Total gross margin before D&A | 24.2 % | 23.4 % | 19.0 % | 23.4 % | 19.8 % | ||||||||||
View original content:https://www.prnewswire.com/news-releases/select-water-solutions-announces-fourth-quarter-and-full-year-2023-financial-results-and-operational-updates-302066457.html
SOURCE Select Water Solutions
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